Serving a preliminary notice is typically required if you want to file a valid mechanics lien in any state. In Michigan, a preliminary notice must be served by certain parties if they want to protect their lien rights.
There are many benefits to serving a preliminary notice: it can open communication lines with higher-tier parties, and notify property owners that you are part of their project and that you are aware of your right to file a mechanics lien if payment issues arise.
One important preliminary notice in Michigan is the Notice of Furnishing. This guide explains the basics of this Michigan preliminary notice and outlines the best practices that you must keep in mind if you want to serve a valid Notice of Furnishing.
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Who must serve a Notice of Furnishing in Michigan?
In Michigan, construction parties who do not have a direct contractual relationship with a property owner are required to serve a Notice of Furnishing. These parties include subcontractors and material suppliers who do not directly contract with the property owner.
When to serve a Michigan Notice of Furnishing
A Notice of Furnishing must be served within 20 days of the day you first furnished labor or materials to a project. You are encouraged to serve the Notice of Furnishing as early as possible, preferably right on your first day of work.
What happens if you fail to serve a valid Michigan Notice of Furnishing?
Failing to serve a Notice of Furnishing is Michigan is not necessarily fatal to your lien rights. However, if you do not serve a Notice of Furnishing within the mandated 20-day deadline, you might limit the amount that you could claim with your potential mechanics lien.
If you serve a Notice of Furnishing after the 20-day period, your mechanics lien can only be filed for the services that you performed starting from the day your Notice of Furnishing is served. The work that you performed prior to the date of serving this preliminary notice may still be recoverable, but only to the extent of the amount that the property owner is yet to disburse to the general contractor.
You are, therefore, encouraged to serve the Notice of Furnishing way before the 20-day period elapses so you can protect your full lien rights. Otherwise, you risk limiting the amount that you can claim with a mechanics lien if payment issues arise later on.
How to serve a Michigan Notice of Furnishing
1. Prepare the Michigan Notice of Furnishing form
The Michigan Notice of Furnishing form must include the following information:
- The name of the property owner
- The address noted in the Notice of Commencement
- The name and address of the party who hired you
- A general description of the type of service that you are performing on the project
- Your name and address
Note that Michigan has a prescribed form for its Notice of Furnishing, so your Notice of Furnishing must substantially be written in the following format:
You may simply use the form above and fill in the required details. Make sure that the pieces of information that you write are accurate. Be mindful of typographical errors and spelling mistakes.
2. Serve the Notice of Furnishing on the property owner and the general contractor
When your Notice of Furnishing form is ready, you must serve it on both the property owner and the general contractor via personal delivery or certified mail with return receipt requested.
If you are serving the Notice of Furnishing by personal delivery, make sure that you get a signed acknowledgment of receipt from the recipient. If you mail your Notice of Furnishing, make sure to keep copies of mailing records.
Best practices when serving a Michigan Notice of Furnishing
1. Serve the Notice of Furnishing on your first day of work
Failing to serve the Notice of Furnishing within the prescribed 20-day period will not necessarily invalidate your right to file a mechanics lien. However, it can limit the amount that you can claim with your potential mechanics lien.
It is considered best practice to serve a Notice of Furnishing right on your first day of work. If you have a template for the Notice of Furnishing form, preparing the form should be easy. By serving the Michigan Notice of Furnishing right on the first day, you do not have to worry about failing to meet the deadline.
2. Keep proof of service
There are two ways to serve your Notice of Furnishing: by personal delivery or by certified mail with return receipt requested. You may choose either method, but you have to make sure that you keep documented proof that you have duly served the preliminary notice.
Ensure that the recipient of your Notice of Furnishing signs an acknowledgment of receipt if you are serving the preliminary notice in person. If you are mailing the Notice of Furnishing, do not forget to get the return receipt option and to keep copies of all the mailing receipts.
3. File a mechanics lien if payment issues arise
A Notice of Furnishing is not a mechanics lien – it is neither recorded in the local county clerk’s office nor it is powerful enough to convince a property owner to pay up. If a payment dispute comes up, you must file a Michigan mechanics lien.
Remember that filing a mechanics lien in Michigan requires a completely different set of steps and rules. A Notice of Furnishing may not suffice if you want to recover payment from a client who turns out to be delinquent.